Question

QUESTION 11

1. The taxing and spending policies of the Federal Government designed to promote national ecomomic goals are known as "fiscal policy."

   True

   False

3 points   

QUESTION 12

1. Most states exempt their own municipal securities from their own state and local taxes.

   True

   False

3 points   

QUESTION 13

1. Firm commitment underwriting is performed by an investment bank that has guaranteed the issuer a sum of money that will be raised by an Initial Public Offering

   True

   False

3 points   

QUESTION 14

1. The Lead Underwriter, in an IPO, prepares the issueing firm's application that is made to the SEC

   True

   False

3 points   

QUESTION 15

1. Insurance is the business of risk shifting.

   True

   False

3 points   

QUESTION 16

1. A Treasury security in which the periodic interest payments been separated from the principal repayment and sold as a different security is called
   
   

   		a T-note
   		a T-bond
   		a Zero Coupon bond
   		a G.O. bond
   		a Revenue bond

Answer 1

11. The correct answer is 'True'. The policy of the government with regards to its expenditure, taxes and income is known as fiscal policy. The government every year laid down its plans of income and expenses along with the taxation policy for the people, which is known as Fiscal policy in economics terms.

12. The correct answer is 'True'. Most states exempt Municipal bonds or muni from state and local taxes. The munis are exempted from federal income taxes as well. The primary reason for this is because the government issue these bonds to raise money for its expenditure and taxing the same would not attract the desired amount as other options would also be there for the investors in that case.

13.The correct answer is 'True'. Firm underwriting is the process under which the the firm underwriter, which is usually a investment bank, assures the issuer that certain amount of shares will be purchased by them in case the issue is not subscribed by the public and in return they charge a legal commission for the same.

14. The correct answer is 'True'. In an IPO process, usually there are more than one investment bank which is involved and there is a lead underwriter who among all prepares the whole application of the firm for the purpose of representation to the SEC.

15. The correct answer is 'True'. Insurance is the business of shifting risk, in which the insured sells or shifts his risk to the insurer, For example, if a house is purchased with risk insurance and if fire took place in the house the risk is not of owner but the insurance company. The individual will be reimbursed for the same.